Roadblock on the Highway to Heaven? The Effect of Religion on Cluster Development in Controversial Industries

Abstract

Industrial clusters are an important driver of economic growth, but regions with comparable resource profiles do not necessarily produce similar clusters. We propose that religion may play an important role in the spatial arrangement of industries and can explain why regions with similar resources do not produce similar clusters. We advance a theory predicting a suppressive effect of religion on the development of industrial clusters in morally controversial industries. We argue that in such industries, regions dominated by denominations that treat controversial industries as immoral will experience lower firm entry rates, compared to regions with a lower presence of such denominations. We theorize about three underlying processes. First, in regions dominated by religious groups opposing a controversial industry, negative attitudes of religious actors generate social environments unfavorable to businesses in this industry. Second, there could be an ecological effect of religion wherein the suppressive impact of a focal region's oppositional religiosity is mitigated when neighboring regions have higher oppositional religiosity than that of the focal region. Finally, in regions with high oppositional religiosity, religious social movements are likely to emerge to target a controversial industry and its participants, which should further repel potential entrants. Our event-count analyses of biotherapeutics firm entry rates in U.S. metropolitan statistical areas from the industry's beginning in 1976 through 2004 support our predictions.